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Yahoo, Microsoft CEOs Seek Innovation in Renewed Search Deal

Five years into their 10-year search partnership, the companies revise the agreement to give Yahoo more flexibility in how it provides search services.

Despite recent rumblings that Yahoo was considering splitting from Microsoft's Bing search technology, the companies announced today that they had renewed the 2009 deal, but with some changes.

In a joint April 16 announcement, Microsoft and Yahoo said, "The companies amended their search partnership to improve the search experience, create value for advertisers and establish ongoing stability for partners." The revised deal grants Yahoo more leeway on how it delivers search services and revamps the ad delivery aspects of the original deal.

"Over the past few months, [Microsoft CEO Satya Nadella] and I have worked closely together to establish a revised search agreement that allows us to enhance our user experience and innovate more in our search business," Marissa Mayer (pictured), said in a statement. "This renewed agreement opens up significant opportunities in our partnership that I'm very excited to explore."

After months of negotiations, the company's inked the original, so-called "Microhoo" search pact on Dec. 4, 2009 in an effort to challenge Google's dominance in the field. "Microsoft and Yahoo believe that this deal will create a sustainable and more compelling alternative in search that can provide consumers, advertisers and publishers [with] real choice, better value and more innovation," said the companies in a statement at the time.

Further reading

Under the terms of the 10-year deal, Microsoft's Bing search and advertising platform would essentially power Yahoo desktop search. Microsoft would pay Yahoo 88 percent of traffic acquisition costs, during the first five years and 93 percent during the last half of the agreement's timetable. "This existing underlying economic structure remains unchanged with today's updates," noted the companies.

Nadella, who inherited the deal from his predecessor, Steve Ballmer, said the "partnership with Yahoo has benefited our shared customers over the past five years and I look forward to building on what we've already accomplished together. Our partnership with Yahoo is one example of the diverse partnerships we'll continue to cultivate in order to have the greatest impact for our customers."

The amended deal provides Yahoo with "increased flexibility to enhance the search experience on any platform, since the partnership is non-exclusive for both desktop and mobile," said the companies. Bing search results and ads will display on the majority of Yahoo's desktop search traffic, they said.

The ad sales portion of the agreement has been modified to increase "agility and sales focus," said the companies.

"Microsoft will become the exclusive salesforce for ads delivered by Microsoft's Bing Ads platform, while Yahoo will continue to be the exclusive salesforce for Yahoo's Gemini ads platform," stated the companies. Launched a year ago, Gemini is Yahoo's mobile search and native advertising product for advertisers.

"Integrating the sales teams with those responsible for engineering will allow both companies to service advertisers more effectively," the companies asserted. The transition is planned to begin this summer.